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CHAPTER 7 Governmental Influence on Trade Multiple Choice Questions Governmental restrictions and incentives to trade are known as _____. terms of trade import substitution protectionism customs valuation When a government imposes import restrictions to help an industry at home that may suffer from import competition, it is apt to _____. hurt another of its industries shift import purchases from one country to another lower the prices the protected industry can charge cause consumers to engage in protest marches Unemployed workers are most apt to form a pressure group to support _____. export restrictions import restrictions export subsidies import subsidies The infant industry argument for protection holds that _____. industries producing goods for infants should get government subsidies and protection industries particularly important for the national economy should be subsidized given the vulnerability of infants, products for their use should be heavily scrutinized by customs an industry needs government protection from imports until it becomes competitive enough in world markets The rationale for the infant industry argument is that _____. incubator centers in which business, government, and academia cooperate will develop entrepreneurial companies a country should give one firm in an industry a monopoly status so that it will grow large enough to be competitive internationally it takes time for an industry to become competitive in world markets, thus protection will allow this industry to pass the critical period lower restrictions should be placed on products coming from countries where a government has a large sphere of political influence All of the following are reasons given for low-income countries to use protection to spur industrialization except _____. industrial countries have tended to grow more rapidly than agricultural ones fear that industrial countries will cease supplying them with manufactured products the need to diversify dependence